How should long-term debt be reported if it matures within one year and the company has arranged, before its current year end, to convert the debt into shares?
A) as non-current and accompanied with a note explaining the method to be used in its liquidation
B) in a special section between liabilities and shareholders' equity
C) as non-current
D) as a current liability

Question

Quizplus · Accepted Answer

Long-term debt that is due to be settled within one year but is arranged to be converted into shares before the year-end should still be reported as non-current. However, it should be accompanied by a note explaining the conversion method, as this arrangement changes the nature of how the debt will be settled, making it important to disclose to users of the financial statements.

How Should Long-Term Debt Be Reported If It Matures Within